Paper short abstract:

Emerging manufacturing production in Angola comes out of a growing domestic demand base, supported by economic engagement with China and a growing consumer demand base. Yet the growth of the domestic demand base faces the vicissitudes of the global economic slowdown and political economy dynamics.

Paper long abstract:

This paper investigates patterns of manufacturing sector development in Angola since the turn of the century and shows that emerging forms of manufacturing production in Angola come out of a process of domestic market formation, i.e. an increase in domestic demand. Domestic market formation is partially supported by economic engagement with China because Chinese construction projects increase demand for building materials, while increased export demand from China allows for higher volumes of capital goods imports. In addition, an emerging consumer demand base attracts increasing volumes of foreign and domestic investment, in particular into the food and beverages sectors. This shows that China's impact on manufacturing sector development goes beyond export-oriented light manufacturing, but it also reveals broader challenges in late-industrialization. At face value, statistics seem to suggest some progress in terms of manufacturing sector growth, even if it remains in the shadow of the much larger mining sector. Yet, the Angolan case also illustrates the importance and difficulty of maintaining a growing domestic demand base. The building materials sector relies on government spending on construction, the scope for which is reduced given the slow-down of the world economy and falling oil prices. Demand growth for consumer goods will depend on improvements in income equality.

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